Most of the milk in developing countries is processed by small-scale processors who produce a variety of milk products. The type of processing employed may vary from country to country and region to region, depending on local tastes, dietary habits, culinary traditions and market demand.

Small-scale processing in developing countries typically involves traditional or semi-traditional technologies, but products have to compete with those of the organized dairy sector (large-scale manufacturers or multinationals). Most small-scale processors do not have access to training, and learn by seeing, hearing and doing. As these businesses are run without formal skills they incur high risks and are of limited cost-effectiveness. Small-scale equipment for pasteurization, packaging in plastic sachets, and butter, yoghurt and cheese making exists, but small-scale processors often lack access to the equipment they need.

As most milk production in developing countries comes from small-scale producers producing small amounts of milk (often in remote locations), the setting up of profitable processing plants can be a challenge. In many regions, this challenge is exacerbated by seasonal fluctuations in milk production. In tropical and sub-tropical areas, milk production volumes are higher in the wet than the dry season, especially from animals that depend largely on grazing. In temperate and high mountain climates, milk production ceases or drastically decreases during the cold season. The seasonality of production constrains milk processing and marketing by causing significant variations in supply.